Oil and Unbalanced Globalization

Georgetown University - Edmund A. Walsh School of Foreign Service (SFS)

Date Written: March 28, 2013

Abstract

We demonstrate that oil wealth is associated with both high levels of economic and social integration and low levels of political integration – a condition we call “unbalanced globalization,” in contrast to more balanced globalization of other countries. We develop and examine three plausible explanations for it. First, oil wealth may retard democratization, which may in turn reduce political integration. Second, oil rich states are able to attract foreign investments and have access to world markets without tying their hands to institutions. Third, oil-rich states export an unusually narrow range of goods, which reduces domestic coalitions in favor of integration. Our evidence primarily points to the second and third mechanisms.